Shankarlal Shantilal Mali Vs National Faceless Assessment (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai bench has remitted the case of Shankarlal Shantilal Mali back to the Commissioner of Income-tax (Appeals) [CIT(A)] for a fresh examination. The appeal, pertaining to the Assessment Year (A.Y.) 2014-15, involves an addition of Rs. 1,00,57,294/- to Mali’s income as unexplained cash deposits under Section 69A of the Income-tax Act, 1961.
Mali, a self-declared small-time mobile accessories retailer, initially filed his return of income for A.Y. 2014-15 declaring a total income of Rs. 3,41,010/-. The dispute arose following a search and seizure operation conducted on May 26, 2017, against Shri Renuka Mata Multi State Urban Cooperative Credit Society Ltd. The Income Tax Department alleged that this cooperative society facilitated large cash deposits by individuals with questionable creditworthiness, subsequently transferring these amounts through various channels.
During the search, it was identified that Mali was a member of the society and had allegedly deposited Rs. 1,00,57,294/- into its account during A.Y. 2014-15. The Assessing Officer (AO) noted a significant discrepancy between this substantial deposit and Mali’s declared financials, deeming the amount as unexplained income after receiving no response to show cause notices.
Mali contested the addition before the CIT(A), asserting that his business transactions were primarily cash-based, and he had offered income on a presumptive basis under Section 44AD, thus not requiring the maintenance of books of accounts. He vehemently denied making such a large deposit, arguing it was beyond his financial capacity as a small retailer. He also highlighted a police complaint he had filed regarding the matter and pointed to a favorable order for A.Y. 2015-16, where identical facts were present. Furthermore, Mali contended that the information relied upon by the AO suffered from defects, indicating “foul play,” and that if any such cash was deposited, it was immediately transferred to unknown third parties, implying no income was derived by him. He also raised jurisdictional issues, suggesting that proceedings should have been initiated under Section 153C instead of Section 147, given the information was obtained during a search.
